Domestic Inquiry - Not Just a Legal Formality

Under Malaysian law, employers are statutorily required to conduct a due inquiry to determine whether an employee is guilty of misconduct before dismissal or imposition of any disciplinary penalty.

However, the Employment Act 1955 does not define what constitutes a “due inquiry” or prescribe how it should be conducted. In practice, most established organisations with clear internal policies carry out a Domestic Inquiry (DI) when investigating employee misconduct.

A DI is far more than a procedural formality. It is a risk-management tool, a compliance checkpoint, and often the most scrutinised process when a termination decision is challenged in the Industrial Court. The real issue is not simply whether misconduct occurred, but whether the employer can defend its decision credibly and consistently.

In some cases, even where misconduct is clear, a substantively justified dismissal may still fail if procedural fairness is compromised. In such cases, the employer can face significant compensation for unfair dismissal. Our Court placed significant emphasis on whether the inquiry was conducted fairly, impartially, and in accordance with the principles of natural justice.

Thus, a domestic inquiry is not about merely ticking procedural boxes. It is about defensibility, consistency, and credibility. A properly conducted domestic inquiry can:

• Reduce legal and litigation risk

• Save costs by avoiding unfair dismissal compensation

• Protect the company’s corporate reputation

• Build trust internally and externally

In short, a domestic inquiry should be viewed as a strategic risk-management exercise, not just an HR procedure.

If you are planning to conduct a domestic inquiry or face a sensitive employee matter, contact us for professional legal guidance to ensure your process is fair, defensible, and compliant with Malaysian law.